Legislature(1999 - 2000)
04/25/2000 01:09 PM House WTR
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HOUSE SPECIAL COMMITTEE ON WORLD TRADE
AND STATE/FEDERAL RELATIONS
April 25, 2000
1:09 p.m.
MEMBERS PRESENT
Representative Ramona Barnes, Chair
Representative John Cowdery, Vice Chair
Representative Beverly Masek
Representative Gail Phillips
Representative Ethan Berkowitz
Representative Reggie Joule
MEMBERS ABSENT
Representative Joe Green
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 273(RLS)(title am)
"An Act regarding oil discharge prevention, and relating to
contingency plans and proof of financial responsibility for all
self-propelled nontank vessels exceeding 400 gross registered
tonnage and for railroad tank cars; authorizing inspection of
nontank vessels and trains; and providing for an effective date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: SB 273
SHORT TITLE: OIL SPILL RESPONSE; NONTANK VESSELS & RR
Jrn-Date Jrn-Page Action
2/15/00 2305 (S) READ THE FIRST TIME - REFERRALS
2/15/00 2305 (S) RES, FIN
2/21/00 (S) RES AT 3:00 PM BUTROVICH 205
2/21/00 (S) Heard & Held
2/21/00 (S) MINUTE(RES)
3/03/00 (S) RES AT 3:00 PM BUTROVICH 205
3/03/00 (S) Heard & Held
3/03/00 (S) MINUTE(RES)
3/20/00 (S) RES AT 3:00 PM BUTROVICH 205
3/20/00 (S) Moved CS(Res) Out of Committee
3/20/00 (S) MINUTE(RES)
3/21/00 2677 (S) RES RPT CS 5NR SAME TITLE
3/21/00 2677 (S) NR: HALFORD, MACKIE, TAYLOR, GREEN,
3/21/00 2677 (S) PETE KELLY
3/21/00 2677 (S) FISCAL NOTES (DEC, DOT)
3/24/00 (S) FIN AT 9:00 AM SENATE FINANCE 532
3/24/00 (S) Heard & Held
3/27/00 (S) FIN AT 9:00 AM SENATE FINANCE 532
3/27/00 (S) Moved CS(Fin) Out of Committee
3/27/00 2745 (S) FIN RPT CS 2DP 6NR SAME TITLE
3/27/00 2746 (S) DP: TORGERSON, PARNELL; NR: PHILLIPS,
3/27/00 2746 (S) GREEN, ADAMS, PETE KELLY, WILKEN,
LEMAN
3/27/00 2746 (S) PREVIOUS FISCAL NOTES (DEC, DOT)
3/30/00 (S) RLS AT 11:45 AM FAHRENKAMP 203
3/30/00 (S) MINUTE(RLS)
3/31/00 2814 (S) RLS TO CAL W/CS 1OR 03/31
NEW TITLE
3/31/00 2814 (S) PREVIOUS FISCAL NOTES (DEC, DOT)
3/31/00 2815 (S) READ THE SECOND TIME
3/31/00 2815 (S) RLS CS ADOPTED UNAN CONSENT
3/31/00 2815 (S) ADVANCED TO THIRD READING
UNAN CONSENT
3/31/00 2815 (S) READ THE THIRD TIME CSSB 273(RLS)
3/31/00 2816 (S) AM NO 1(TITLE AM) ADOPTED
UNAN CONSENT
3/31/00 2816 (S) PASSED Y16 N2 E2
3/31/00 2816 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
3/31/00 2819 (S) HALFORD NOTICE OF RECONSIDERATION
3/31/00 2819 (S) RECON TAKEN UP SAME DAY
UNAN CONSENT
3/31/00 2820 (S) PASSED ON RECONSIDERATION Y17 N1 E2
3/31/00 2820 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
3/31/00 2821 (S) TRANSMITTED TO (H)
4/03/00 2831 (H) READ THE FIRST TIME - REFERRALS
4/03/00 2831 (H) RES, WTR, FIN
4/12/00 (H) RES AT 1:45 PM CAPITOL 124
4/12/00 (H) Heard & Held
4/12/00 (H) MINUTE(RES)
4/14/00 (H) RES AT 1:00 PM CAPITOL 124
4/14/00 (H) Moved HCS CSSB 273(RES) Out of
Committee
4/14/00 (H) MINUTE(RES)
4/17/00 3222 (H) RES RPT HCS(RES) 8NR
4/17/00 3222 (H) NR: WHITAKER, MORGAN, BARNES,
COWDERY
4/17/00 3222 (H) MASEK, HUDSON, HARRIS, JOULE
4/17/00 3222 (H) FISCAL NOTE (DCED)
4/17/00 3222 (H) 2 SEN FISCAL NOTES (DEC, DOT 3/21/00
4/25/00 Text (H) WTR AT 1:00 PM CAPITOL 120
WITNESS REGISTER
SENATOR DRUE PEARCE
Alaska State Legislature
Capitol Building, Room 111
Juneau, Alaska 99801
POSITION STATEMENT: Sponsor of SB 273.
LARRY V. DIETRICK, Director
Division of Spill Prevention and Response
Department of Environmental Conservation
410 Willoughby Avenue, Suite 105
Juneau, Alaska 99801-1795
POSITION STATEMENT: Testified on SB 273.
BRECK TOSTEVIN, Assistant Attorney General
Environmental Section
Civil Division (Anchorage)
Department of Law
1031 West 4th Avenue, Suite 200
Anchorage, Alaska 99501-1994
POSITION STATEMENT: Testified on SB 273.
ACTION NARRATIVE
TAPE 00-5, SIDE A
Number 0059
CHAIR RAMONA BARNES called the House Special Committee on World
Trade and State/Federal Relations meeting to order at 1:09 p.m.
Members present at the call to order were Representatives Barnes,
Cowdery, Masek, Phillips, and Joule. Representative Berkowitz
arrived as the meeting was in progress.
SB 273-OIL SPILL RESPONSE; NONTANK VESSELS & RR
Number 0096
CHAIR BARNES announced that the committee would hear CS FOR
SENATE BILL NO. 273(RLS)(title am), "An Act regarding oil
discharge prevention, and relating to contingency plans and proof
of financial responsibility for all self-propelled nontank
vessels exceeding 400 gross registered tonnage and for railroad
tank cars; authorizing inspection of nontank vessels and trains;
and providing for an effective date."
CHAIR BARNES explained that the purpose of the meeting was to
hear from Senator Drue Pearce, sponsor, who was offering a new
proposed committee substitute (CS). She noted that since SB 273
was last heard in the House Resources Standing Committee, the
House had passed House CS for Senate Concurrent Resolution No. 1
(RUL) to the Senate. She called attention to a new fiscal note
provided by the Department of Environmental Conservation (DEC).
Number 0247
REPRESENTATIVE PHILLIPS moved to adopt proposed HCS for CSSB 273,
Version Z [1-LS1464\Z, Chenoweth, 4/25/00], as the working
document before the committee. There being no objection, it was
so ordered.
Number 0247
SENATOR PEARCE explained that Version Z makes a number of changes
from [HCS CSSB 273(RES)], which was passed out of the House
Resources Standing Committee. She told members:
The financial responsibility portions of the bill are
still there, so that both nontank vessels and the
railroad would meet financial responsibility
requirements on the effective date of the bill.
However, while we lay out the planning standards in
statute, the effective date of meeting those planning
standards for nontank vessels and the railroad is not
in the bill.
Instead, we have [Senate] Concurrent Resolution No. 1.
The Senate has failed to concur on the language because
the financial responsibility piece is no longer needed
in the resolution, but upon completion of a conference
committee on that resolution, it is coming back over to
you [the House] today [so that the House can] fail to
recede and we can go to conference [committee]. Upon
completion of that, SCR 1 would pass, which sets up a
task force that this fall would meet to set the rules
for how the contingency planning portion of the bill
would be put into effect to meet the planning standards
that are in the statute.
Those would be brought back to us [the legislature] on
or before the first day of the legislative session in
2001, at which time legislation would have to pass the
next legislature that would put that rule making into
law and "turn on" the contingency planning process for
both the nontank vessels and the railroad. The
resolution itself lays out the same planning standards,
and that is what the task force would work toward
meeting. Frankly, that is the big change. ...
There is transition language in the [Z] version of 273
that you have before you, and it does speak in Section
7 about the task force, and that the task force is to
deliver a report back to the legislature. So the
concurrent resolution and the bill would now travel
together, so to speak.
SENATOR PEARCE explained that she had in hand a rough markup from
Mr. Chenoweth of Legislative Legal Services, who had not yet had
time to prepare a sectional analysis. She then reviewed for the
committee what Mr. Chenoweth has done to the bill:
Sections 1 and 2 of the Resource Committee version have been
deleted.
Section 3 has been renumbered.
Subsection (1) of the previous Section 3, which said that
effective April 1, 2002, the oil discharge prevention
contingency plans go into effect, is no longer there.
The word "only" has been changed to "predominantly"
persistent product, a clarification that had been agreed
upon.
On the former page 3, the language that had been on lines
15-17 has been deleted. That had specified an effective
date of April 1, 2001, for the contingency plan section that
is no longer going into effect under the bill.
The proof of financial responsibility remains the same.
Another effective date has been dropped in relation to the
railroad, but the standards [for the railroad] are laid out
in the actual bill.
The "innocent passage" language has been modified.
All of subsection (f) was deleted, and everything following
it has been renumbered.
The transition language changes because of the new
resolution regarding the task force.
Number 0600
SENATOR PEARCE said this is virtually the same as what she had
proposed last week. She concluded:
We do financial responsibility now. We've put the
planning standards for nontank vessels and the railroad
into the statute, but we don't turn them on until the
task force has a chance to report back to the
legislature. That's it, in a nutshell.
Number 0627
REPRESENTATIVE COWDERY asked if financial responsibility could be
satisfied in bond form.
SENATOR PEARCE said she would rather have the Department (DEC)
answer that, and that Mr. Dietrick of DEC was present.
Number 0674
LARRY V. DIETRICK, Director, Division of Spill Prevention and
Response, Department of Environmental Conservation, rephrased the
question as, "What forms may be accepted by the state?" He said
it would be the same forms of insurance the state currently
accepts; there is a menu of forms, "everything from P&I
[protection and indemnity] clubs to self-insurance to financial
guarantors to various forms of insurance."
Number 0703
REPRESENTATIVE COWDERY asked about self-insurance in relation to
the railroad, mentioning that the railroad is now having some
problems.
Number 0731
CHAIR BARNES directed attention to a letter [included in members'
packets] she had received from the railroad regarding what the
railroad has been doing and speaking to its support of Senator
Pearce's initial legislation. Chair Barnes said she believes the
railroad had testified before the House Resources Standing
Committee that it has either insurance or an amount of money set
aside. She read from the letter:
Over the last several years, the Alaska Railroad
Corporation has had in place two $10 million lines of
credit, one to meet self-insurance requirements and one
to meet operational requirements. These credit lines
are [with] two separate national banks. They are
currently for one year and are renewable annually. At
this time, the lines of credit are whole and have not
been drawn upon.
CHAIR BARNES noted that it goes on to say how [the railroad]
would lay out its portion of the contingency.
REPRESENTATIVE COWDERY indicated that had answered his question.
REPRESENTATIVE BERKOWITZ raised a question relating to language
that states, "A person cannot cause or permit the operation
unless the person has furnished to the Department certification
...." He said that frequently the vessel operator is not the
same as the vessel owner, and the vessel operator might not be
the individual who had supplied proof.
SENATOR PEARCE said that language is the same as that presently
in the laws pertaining to tanker vessels. She noted that this
bill has not changed who is responsible to the department; that
it is still the owner.
Number 0899
BRECK TOSTEVIN, Assistant Attorney General, Environmental
Section, Civil Division (Anchorage), Department of Law, testified
via teleconference from Anchorage. He told members that as he
understood the question, it related to the wording of who
actually applies for the certificate of financial responsibility.
He specified that this proposed legislation doesn't change who
applies for the certificate. The prohibition in the law is that
the vessel - or the railroad, in this case - cannot operate
without having that certificate. Basically, one applies to the
department, showing the proof of financial responsibility, and
the certificate is issued. That certificate is then shown when
loading fuel or otherwise operating, as proof of financial
responsibility.
CHAIR BARNES asked Representative Berkowitz whether that answered
his question.
REPRESENTATIVE BERKOWITZ replied that it explains the situation,
and he understands what is going on.
Number 0973
REPRESENTATIVE PHILLIPS referred to page 3, line 5, Section 3.
She requested an explanation of Section 3, relating it back to
the previous paragraph.
SENATOR PEARCE deferred to Mr. Tostevin, noting that it is part
of the financial responsibility section.
MR. TOSTEVIN expressed confusion about that section.
SENATOR PEARCE suggested that Mr. Tostevin probably didn't have a
copy of the proposed CS [Version Z].
REPRESENTATIVE PHILLIPS [referring to an unspecified version of
the bill] informed Mr. Tostevin that the language can be found
under Section 1, [subsection] (d), and then the third [paragraph]
under (d).
Number 1029
MR. TOSTEVIN responded that this language has to do with the
financial responsibility requirements. He indicated that the
version from the House Resources Standing Committee [HCS CSSB
273(RES)] had provided an exemption from the existing
requirements in Alaska law that an insurer agreed to be subject
to direct action in Alaska courts with respect to the financial
responsibility, and also to appoint an agent for service of
process. This language carries forward that exemption, he said.
Subsection (d) provides three exemptions under existing law. He
stated:
It says, "Notwithstanding the requirements of .040(e),"
which is in the existing financial responsibility
requirements, which (indisc.) direct action, (indisc.)
service of process, ... (l) is a similar provision with
respect to tank vessels, and .047 has a provision with
nontank vessels. And then the section goes on to say
that the applicant can provide evidence of financial
responsibility through proof of entry in a P&I
[protection and indemnity] [club] or other insurer, and
then it goes on to say ... that the insurer has to be
financially solvent, have a favorable history of claim
handling. It provides coverage against exclusion risks
in at least the amount required under (a) of this
section, without any special enforcement. And these
endorsements, requirements, [are] something that DEC
currently has in its regulations for tank vessels.
And then (3), ... doesn't have to agree to direct
action in court or appointment of (indisc.) in a
service of process; that has to do with the actual
insurer. And then (4) is, again, a provision that's
already allowed in existing law. A P&I club doesn't
actually have to be registered to sell insurance in
this state as long as they aren't ... on the
"disapproved" list [of] the Department of Community &
Economic Development. That's an overview of ... what
that section does.
Number 1156
CHAIR BARNES thanked Mr. Tostevin and asked whether there were
additional questions. She then asked Senator Pearce how the
economic impact on the businesses affected by this would be
addressed. She further inquired about the overlap of federal and
state laws.
SENATOR PEARCE addressed the second question first. She said the
resolution, in the form to be proposed, will say that one thing
the task force needs to do - "as it does its rule making and then
makes the recommendations of those rules to the legislature to
make another statutory change" - is to make recommendations that
concern Alaska Statutes and regulations which are not subject to
preemption by federal law; those will be "layered" to work
together, rather than just adding costs, state compliance being
different from federal compliance. Turning attention to concerns
about any financial obligations and potential costs, she stated:
We don't have an effective date for the contingency
planning portion, so that will have to come back. The
task force, as a part of the process, will lay out what
the actual rules would be for meeting contingency
plans, and we will be able to cross those out, probably
specifically, now that we have planning standards in
the law, so you know what your plan [would fit]. So
before anybody could come back with recommendations,
those would be "costed out," and I would expect that
you will see perhaps not a fiscal note to the state,
but a clear understanding of what the costs would be to
the railroad and the nontank vessels as that
legislation is brought back to the legislature next
year.
Number 1300
CHAIR BARNES thanked Senator Pearce but asked that she add to the
explanation. To her, she said, it is important what the
financial effect is of adopting this type of legislation,
including effects on the export of fish, timber and minerals.
Those are affected by how this is implemented, and she believes
the question must have an answer.
SENATOR PEARCE answered:
The task force will be, as a part of the process,
putting the rules together. I think one of the
intents, even, is that there not be ... an adverse cost
to the different industries. ... So, those costs will
be developed. We will figure out what it would be, and
then we'll have to look at each industry and decide,
"Is that going to be adverse to our resources on the
worldwide market?" If the costs, frankly, Madame
Chairman, end up being what I suspect they'll be, from
just going through the rough drafts, I don't think that
we're going to impact any single industry sufficiently
to be able to say that it adversely impacts Alaska's
resources on worldwide markets. But that's something
that we'd be looking at.
If any industry feels that they are being that
adversely impacted, I would expect that they - all the
industries will be a part of the task force already -
... will come back with either not agreeing with the
recommendations of the task force, and come back to the
legislature and say, "Here are the specific costs, and
here is why this will adversely impact our ability to
sell our resource in world markets," whatever that
resource might be. So, we will be looking at those on
the task force.
Number 1398
CHAIR BARNES restated that she thinks it is crucial to know what
those costs are. Noting that she had provided this example
before, and that she believes it is pertinent, she stated:
For example, you take a barge that's laden with barrels
of fuel. That's affected by this legislation, those
barrels of fuel, because if it were carried in a
tanker, it would already be covered. But since it's
being carried in barrels for home heating fuel or for
cooking, for those sorts of things that are directly
related to rural Alaska, ... you need to address what
that impact would be on those types of fuels that are
being carried to Western Alaska or wherever they might
be.
Number 1456
SENATOR PEARCE said she understood what Chair Barnes was saying.
However, she was trying to figure out whether the bill, as
written, would cover those anyway. It says "self-propelled," she
indicated, so barges are not covered but a self-propelled ship
carrying those would be included. Fuel delivery to the villages
is already covered under present law, she added.
CHAIR BARNES asked, "If it was a tanker-type?"
SENATOR PEARCE responded, "In a fuel barge." She said she isn't
sure what happens at the moment to onboard tanks, but onboard
tanks on barges are not in this bill, so they won't be affected.
"We took that out on the Senate side," she added.
CHAIR BARNES said she was talking about self-propelled types such
as boats that would carry home heating fuel. She restated that
it does have an impact, "and we need to know what those things
are."
Number 1506
REPRESENTATIVE PHILLIPS pointed out that there is a weight factor
also; some of those smaller landing craft, for example, wouldn't
be covered under this.
CHAIR BARNES said that [exclusion] is [for vessels] under 400
tons.
SENATOR PEARCE agreed, saying the small ones are not covered by
the bill.
CHAIR BARNES reiterated that all of those things need to be
looked at "because we can't afford to drive up the cost of living
in Alaska, especially in the rural areas of the state." As for
fish, if the cost of doing businesses is driven up, and
[fishermen] cannot compete with the Norwegian salmon being pen-
reared, "we need to know that too."
CHAIR BARNES asked whether there were additional questions for
Senator Pearce; none were offered. She announced that no further
testimony would be taken that day, and she noted that [Mr.
Tostevin] of the Department of Law and Michelle Brown,
Commissioner, Department of Environmental Conservation, had been
standing by to answer questions. She suggested that everyone
needed an opportunity to study the proposed CS before the next
hearing. Rather than adjourn, she would recess the meeting to
the call of the chair in order to provide some time to study this
and determine exactly what issues need to be brought forward to
the sponsor.
REPRESENTATIVE PHILLIPS requested that the committee be provided
a copy of the sectional analysis as soon as it was done.
Number 1589
CHAIR BARNES affirmed that her staff would distribute it to each
member as soon as possible.
ADJOURNMENT/RECESS
CHAIR BARNES recessed the meeting of the Special House Committee
on World Trade and Federal Relations at 1:34 p.m., to the call of
the chair.
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